Which measure is used to summarize the difference in costs and health effects between two interventions by dividing the difference in costs by the difference in effects?

• A. Net monetary benefit
• B. Quality-adjusted life year
• C. Incremental cost-effectiveness ratio
• D. Disability-adjusted life year

Answer: (C)

The key idea here is the incremental cost-effectiveness ratio. This measure captures the trade-off between paying more and getting more health benefit when you switch from one intervention to another. It takes the difference in costs between the two options and divides it by the difference in their effects. The result tells you how much extra money you’d need to spend for each additional unit of health outcome you gain (for example, per additional QALY or life-year).

If the effect is measured in QALYs, the ICER translates into the cost per QALY gained, a common way to assess value in health care. A lower ICER generally signals better value, but you compare it to a willingness-to-pay threshold to decide if the extra cost is worth the extra health benefit. If the new option is cheaper and more effective, it’s often described as dominant, leading to a favorable (often negative) ICER. If it’s more costly and less effective, it’s dominated, resulting in a less favorable ICER.

Net monetary benefit is related but uses a different framing: it converts health effects into monetary terms using a willingness-to-pay value and then subtracts costs. The ICER directly expresses cost per unit of effect, which is why it’s the standard measure for summarizing the cost-effectiveness trade-off in this scenario.